Number of mortgages reaches highest level since 2007

Friday, November 14, 2014

The number and value of mortgages taken out by home buyers reached its highest level since 2007 in the third quarter of the year, despite signs of a slowdown in late summer, figures from mortgage lenders showed on Tuesday. From July to September 188,000 mortgages worth a total of £32.4bn were advanced to first-time buyers and home movers, the Council of Mortgage Lenders said, the highest totals since the final three months of 2007 when the housing market downturn was just beginning.

However, although rising house prices mean the value of those loans has almost returned to its pre-crisis level, the number was still below the 223,900 recorded in quarter four of 2007, and lower than in any quarter between 1996 and 2008. The CML’s figures show that the number of loans made to first-time buyers and those moving up the housing ladder both fell for a second month running in September as the housing market cooled.

First-time buyer numbers fell for the second month running and were down by 3% on August’s figure at 26,800, while the value of mortgages advanced to them was down by 2% month-on-month at £4bn. The group said first time buyers typically borrowed 3.4 times their gross income, slightly lower than the 3.42 times in August, taking an average loan of £125,999.

Lending to home movers also weakened for the second month in row, with the number of mortgages down by 10% in September at 31,700, and the value down by 12% at £6bn. These borrowers typically took on loans worth £154,800 in September, an average of three times their earnings.

The number of borrowers remortgaging picked up, rising by 20% during the month, although despite a fierce price war breaking out between lenders, it was still down by 12% on September 2013.

Paul Smee, director general of the CML, said it had been a year of change, transition and growth as banks and building societies had got to grips with new rules on lending.

He added: “The lending market is healthier than it was a year ago, and set to remain so. Remortgaging has returned as a driver of lending volume in the buy-to-let sector. But any fears of over-heating in the housing market are now dissipating as house purchase lending activity seems to be softening.”

Jonathan Harris, director of mortgage broker Anderson Harris, said it seemed that confidence amongst buyers was falling. “‘Despite the third quarter seeing the highest levels of house purchase since 2007, the number of first-time buyers slipped for the second consecutive month. This reflects the market generally with the number of home movers also falling.”

Separate figures from property firm London Central Portfolio show that the number of house purchases in England and Wales in the first nine months of the year was up by 28% year on year, at 880,959. The figure, which is based on analysis of Land Registry data which includes cash purchases, is far higher than that immediately following the credit crunch, and above the long-term average.

LCP said the sales recorded included the second most expensive property ever registered with the Land Registry – a £50m apartment on Prince’s Gate in Westminster, London.

At the other end of the scale, a flat in Batley, West Yorkshire changed hands for £10,000.